Study highlights long-term costs of charter school expansion

Pennsylvania school districts may be able to reduce some expenses when more of their students enroll in charters, but they still face significant financial costs long after those students have gone, a report being released Wednesday says.

Those continuing expenses include pension costs and making required payments to bondholders for facilities.

And the study by Research for Action (RFA), an independent research group in Center City, found that the fiscal impact on a school system depends not only on the rate of charter growth, but also the size of the district.

"Increasing charter school choices to a community does not occur without a significant fiscal impact," said David Lapp, director of policy research at RFA and lead author of the report.

Charter school enrollment is on the rise. State Department of Education data show such enrollment more than doubled between 2008-09 and 2015-16 — to nearly 135,000 students. More than half were in Philadelphia, which had almost 70,000 students in 83 charters in 2015-16.

Districts pay charter schools for each student who attends. A formula in state law determines the amount, based on how much a district spent to educate its own students the prior year.

The report concluded that districts with growing charter enrollments need more money to maintain the same level of services to their remaining students.

Lapp called understanding the fiscal impact of charter school expansion "critical" for districts to anticipate current and future costs. He said RFA believes the report will help policymakers consider ways to reduce financial stress on districts as the state works to ensure adequate funding for students in all public schools.

Mark Gleason, executive director of the Philadelphia School Partnership, a nonprofit that has raised tens of millions of dollars for city charter, parochial, and public schools, called the examination "a comprehensive and honest effort," and said the study provided further evidence that the "stranded costs" districts face for every added charter seat decrease over time.

Gleason also said it was a mistake to focus on costs without considering the benefits.

"There is a big benefit to having charter schools in Philadelphia, and that does come with a cost," he said.

While other studies have tried to assess the cost of charter expansion in Philadelphia, the RFA report looked at the impact statewide using six school systems of differing sizes and charter options — including Philadelphia, Central Bucks, and Oxford, Chester County.

Working with independent finance experts, school district officials and charter representatives, RFA analyzed scenarios of possible annual charter growth rates for five years for each district and looked at the ways districts could adapt.

While the fiscal impact varied, districts were not able to cut expenses to break even. That was true even in the most extreme example considered for Philadelphia. RFA projected that with 4 percent annual charter growth for five years, the district would still face more costs even if it closed 47 buildings and laid off 1,200 teachers.

The report pointed out that districts' financial burdens for charters grew in 2011-12, when the legislature ended a program that reimbursed districts for part of their charter costs. The prior year, districts had received an average of $2,417 from the state for each of their charter students.

The Pennsylvania Association of School Business Officials and the state Association of School Administrators, which worked with RFA, endorsed the report and called it "a breakthrough in objectively measuring the stranded cost to school districts when students leave to attend charter schools."

Ana Meyers, executive director of the Pennsylvania Coalition of Public Charter Schools, said her group had participated to represent charters. She applauded RFA for clearly explaining the methods it used to make its calculations.

But she said the report doesn't highlight the value charters provide both for families and taxpayers. "Charters are educating kids for approximately 25 percent less than districts, creating opportunity for all kids and a bargain for taxpayers," Meyers said. "Yet regrettably there is an absence of this conversation in this report."